Public Enterprises Budget Review and Recommendation Report; Venezuela and Brazil Study Tour Committee Report

Meeting report

The Chairperson apologised for the fact that Members had not been sent a copy of the draft Budget Review and Recommendation prior to the meeting but suggested that the Committee work through it nevertheless.

Dr S Van Dyk (DA) expressed his dissatisfaction at not having received the report before the meeting and asked for this to be put on record. While he appreciated the hard work that had gone into the Report, members needed the opportunity to consider the report before the meeting.

The Chairperson agreed and said Dr Van Dyk spoke on behalf of the Committee on this matter.

Ms G Borman (ANC) said she had not seen a quarterly Section 32 report and so the Committee was totally reliant on the research report that was in front of it and not on anything that the Committee had worked through itself.

The Chairperson said that Ms Borman was right and that quarterly reports had indeed not been received. The Researcher had interacted with the Department of Public Enterprises (DPE) and had used the DPE’s Annual Report, received the previous week, in compiling his Report.

Budget Review and Recommendation Report of Portfolio Committee on Public Enterprises
Mr Eric Boskati, Committee Researcher, presented the Committee’s draft BRRR report to the Committee. The Committee’s role was to assess the budgetary needs and shortfalls of the DPE which was responsible for the oversight nine state-owned entities (SOEs), namely Alexkor, Broadband Infraco, Denel, Eskom, Pebble Bed Modular Reactor (PBMR), South African Airways (SAA), South African Express (SAX), South African Forest Company Ltd (Safcol) and Transnet.

Mr Boskati presented the Strategic Priorities and Measurable Objectives of the Department. Key policy and strategic objectives had been concretised, particularly New Growth Path (NGP) and the Industrial Policy Action Plan (IPAP). One strategic output was to achieve policy and regulatory clarity in sectors in which the state owned companies operated. Transnet had been complaining about the National Energy Regulator of South Africa (NERSA) and the tariff increase. When Transnet needed more money it had received less and this hampered its infrastructure build programme. Mr Boskati presented his analysis of the strategic and measurable objectives of the Department six programmes – Administration, Energy and Broadband Enterprises, Legal Governance and Transaction, Manufacturing Enterprises and Joint Project Facility.

Ms Boskati noted that the previous year Eskom had reported a weak balance sheet and a funding shortfall of R190 billion. This year Eskom had reported a funding shortfall of R300 billion, but 71% of this amount had already been secured with the help of the Department and government.

Trend expenditure analysis of the Department showed that funding was decreasing and there would be no further funding from government for SOEs.

The implementation of the deed of settlement with the Richterseveld community had been the main issue occupying the Legal Governance and Transactions programme of the Department. An upgrade of the township’s civil and electrical engineering services to municipal standards had commenced and would be completed by the end of this year.

Denel was facing financial problems and the main focus of the Department’s manufacturing programme had been engagement with Denel and the National Treasury regarding effective implementation of Denel’s turnaround strategy. A roll-over of guarantees amounting to R1.85 billion had been secured as interim support to Denel.

Mr Boskati presented his analysis of the annual reports and financial statements of SOEs holder beginning with shareholder capital and debt. Table 4.1 (a) showed the amount of money received by the Department for each of its six programmes. The Department had received R555.5 million from National Treasury in total (up from R3.9 million in the previous financial year), of which R540 million had been spent. Three transfers had been made to SOEs in the 2010/11: R36 million to Alexkor for the development of the Alexander Bay township; R181.2 million to Denel ; and R20 million to the PBMR. This totalled R237.2 million. No transfer payments to SOEs were made in the 2011/12 year so far. Funds received by the Department were for its administration and its oversight functions only. The Department had indicated that SOEs needing further funding would need to come up with this themselves through public-private partnerships, international suppliers and possible the SOE customer base. It was common practice around the world for large customers to invest in rolling stock (in the case of rail) or in power stations (electricity).

Table 4.3 (a) showed the percentage of the 2011/12 budget spent in the April-June quarter of the financial year per programme. Some programmes had already spent as much as 73.3% of their annual budget (Energy and Broadband) whereas some had spent only 6.02% (Joint Project Facility) of their annual budget in the first quarter. Under-spending was due mainly to vacant posts in certain programmes

The Department had received an unqualified report with no emphasis on any accounting matter.

The Committee had undertaken an oversight visit to Denel in order to familiarise itself with the challenges faced by the Saab-Aerostructures division of Denel.

The Committee was delighted that the Department had received a clean audit and unqualified report from the Auditor General but raised concern over the large number of vacancies in the Department. The Committee was also disturbed that the Department and internal audit mechanisms were unable to detect misconduct. It was particularly concerned that Standing Committee on Public Accounts (SCOPA) had not managed to detect irregular expenditure of R8.5 billion. The Researcher asked the Committee members to give their inputs on further recommendations.

Discussion
Mr P Van Dalen (DA) said that he had read a lot in the media about the Transnet National Ports Authority’s tariffs being unacceptably high. Different sectors, such as the oil rigging companies, were complaining that Transnet’s tariffs were too high and prevented them from coming in with their oil rigs. Opportunities for bringing money into the country and creating jobs were thus being lost.

Mr Van Dalen said there was a shortage of apprentices in Transnet’s freight and rail sectors. This should be monitored and one of the DPE’s strategic objectives should be to monitor this. The IPAP issue of gas imports should also be made a focus point and should be kept track of.

Mr Mokoena said that the Committee’s concern about the “double oversight” of the Committee and the DPE over SOEs should be captured in the Report. Both the Committee’s mandate and the DPE’s mandate were to exercise oversight of SOEs. This was not proactive management.

Ms Borman said that there had been a lot of emphasis on South Africa as a “developmental state” which, as far as she could see, was not coming across in the Report. The Committee was trying to differentiate between a hands-on shareholder approach and the sectoral and policy making approach. This should be emphasised.

Mr Mokoena asked if Transnet and other SOEs could not “plug into” and access the R800 billion fund that National Treasury had been made available for infrastructure instead of the SOEs having to look elsewhere to borrow money. Their report should make the link between the weak balance sheets of parastatals and these available funds. Otherwise this money might be rolled over and not claimed.

Ms Borman said that Mr Mokoena was making a good point but asked if the funds would not come through the Department of Energy and Water Affairs as this was the type of infrastructure that included the huge community building projects required. She was not sure how the DPE would tap into this money.

Mr Mokoena said he had listened to SAFM with great delight that morning as it had announced that Alexkor would be going into the Democratic Republic of Congo, Uganda, Ghana and the rest of Africa. The speaker had mentioned that Alexkor was now over the hurdle of its conflict with the community. The hatchet had been buried and Alexkor would now meaningfully partner with the community. This could be captured in the Report.

Mr M Sonto (ANC) asked about the upgrade of the township’s civil and electrical engineering services to municipal standards where Alexkor was just a project manager but which was funded by the Department as required by the out of court settlement that had been reached with the community. When Alexkor made presentations to the Committee it made it seem as if Alexkor was funding the project whereas in actual fact it was the Department that was funding the project.

Mr Van Dalen made the point that Alexkor was in fact government. What had happened was Alexkor had set up a mine and had to look after the people there. It had therefore built a village but the village did not conform to municipal standards. The out-of-court settlement required that the DPE upgrade the village to meet municipal standards and hand it over to the municipality. This was what the R150 million was meant to be for. Mr Van Dalen had visited the village last week but it did not look as if much had been done with the money and the village looked the same as it had two years ago. The Committee should visit the village to investigate this.

Mr Koornhof suggested that the Report state that the roll-over of guarantees amounting to R1.85 billion for Denel had a time limit which was September 2012. Denel SAAB Aerostructures was also in need of urgent funding and this should be included under heading 3.4 of the Report. An analysis of Safcol should also be included under heading 3.4. Similarly, an analysis of SA Express should be included under heading 3.5.

Mr Mokoena said that SAA was classified as “superstructure” but that aviation infrastructure was in fact “infrastructure”. Could SAA not also access the R800 billion set aside by Treasury for infrastructure development to assist its weak balance sheet?

Mr L Greyling (ID) suggested that South African Renewables Initiative also be mentioned under heading 3.6 “Joint Project Facility”.

Dr Koornhof (ANC) suggested that an analysis paragraph – looking at aspects such as job creation, funding, and the delivery of SOEs on their objectives, be added at the end of section 3 of the Report.

Mr Mokoena said that the President had made R9 billion available for job creation and R10 billion available to the IDC. In the context of SOEs coming before the Committee with their plans for job creation, but saying that they were hamstrung by a lack of money, could the R9 billion made available for job creation through the IDC not be made available to SOEs? MPs must encourage that money “locked up in financial silos” be accessed by SOEs.

Dr Koornhof said that expenditure for the July-September quarter should be available from Treasury by now and that this should be included in Table 4.3 (a).

Dr Koornhof and Ms Borman said that the Committee needed to find out the reasons behind under/over spending in the first quarter and conduct an analysis of this.

Dr Koornhof said that the reported 26 vacancies in the Department had been reduced. This should be included in the Report.

Mr Van Dalen suggested that money be reallocated from the under-spending programmes to the ones that had overspent. If there was not a need for this, then the money left over could just go back into the fiscus.

The Committee agreed that the spending patterns of programmes in the DPE should be carefully monitored on a quarterly basis to make sure that any irregularities were picked up in good time and well before the end of the financial year.

Mr Mokoena asked why no transfer payments to SOEs were to be made in the 2011/12 year.

Mr Boskati replied that a lot of money had been pumped into SOEs in the past eight or so years. When the government decided not to privatise these sectors, SOEs approached the government saying that if the entities were to be run as state-owned then the government needed to recapitalise them. Since 2002 the government had injected large amounts of capital into these SOEs. In 2007/08, the government realised that the SOEs problems had not been solved and that the balance sheets of the SOEs had not improved despite these large capital injections. The reason why no transfer payments were being made to SOEs was because of this history. Government has told SOEs that they needed to look for funding in the market. If they could not do so because of their weak balance sheets then these SOEs should make plans to improve their balance sheets.

Mr Koornhof pointed out that the transfer payments to SOEs were over and above the guarantees government gave to the SOEs.

Mr Koornhof suggested that an extra paragraph giving overall trend analysis needed to be added to the end of section 5 of the Report.

Mr Mokoena asked if the study tour to Venezuela and Brazil, as well as the two workshops held by the Committee, could be included as part of the Committee’s “Oversight” for the year so that the Committee did not come across as having done only one oversight visit and nothing else.

Mr Koornhof proposed the abovementioned four interventions by the Committee be included in the Report.

Mr Koornhof suggested the template for the report included an additional section on the “Consideration of the reports of Standing Committee on Public Accounts (SCOPA)” and “Resources information”. Transnet had an irregular expenditure of R8.5 billion included in which there was substantial fruitless and wasteful expenditure. The Report should state that it had not received any reports on this from SCOPA. Was it allowed for one committee to report on another committee? If it was allowed, then it should be stated in a paragraph before section 7 of the report that the Committee had not received a report from SCOPA despite the irregular expenditure of R8.5 billion by Transnet nor had the SOE been interrogated or called to account for this.

Mr Mokoena said it was absolutely unbelievable that SCOPA had not picked up on this irregular expenditure. It was outrageous.

Mr Koornhof said that bullet three on page 17 should be deleted. Only once the analysis had been completed, should the Committee complete the section on its recommendations.

Mr Koornhof suggested that the report not use the word “satisfied” in the sentence under section 8 stating that “The Committee is satisfied with the service delivery performance of the Department”, nor the term “service delivery” as the DPE could more accurately be described as a “service management” department. Further, the role of the shareholder in overseeing the SOEs should be recognised in the Conclusion of the Report, as well as the governance oversight model being used in South Africa

Mr Mokoena said the report should acknowledge and compliment the management team of the Department for its performance.

Mr Mokoena said that the Committee should write to SCOPA about the outrageous irregular expenditure of R8.4 billion to find out how this escaped its attention.

The Chairperson confirmed that the final draft would be ready the next day.

Deliberations and Adoption of Committees Report on Study Tour to Venezuela and Brazil
Mr D Mocumi, the Committee Secretary, presented the draft report of the Committee’s study tour Venezuela and Brazil from 22 July to 1 August 2011. The purpose of the study tour was to learn how the Venezuelan and Brazilian governments managed to align the mandates of SOEs with the developmental objectives of those countries. The Committee attempted to learn how the executive exercised oversight over SOEs; about the corporate governance model of SOEs and how parliament exercised oversight to ensure compliance with corporate governance principles in these countries.

The draft report gave a brief political and economic overview of Venezuela and Brazil. This included an overview of the political dispensations in these countries and the types of economic policies pursued by each. The number of SOEs and the way in which the Venezuelan government used them to pursue its socialist agenda was included under this section. The views of the opposition parties were also included.

The report presented an overview of a number of SOEs in Venezuela and Brazil, each entity’s performance, how each entity was regulated and the service provided by each entity. Venezuelen entities reviewed were those operating in telecommunications, cargo and passenger airlines, railway transport, electricity, forestry, agriculture, mining, iron and steel, oil, and public banking sectors. Agropatria, an agriculture SOE in Venezuela, reported that it was able to meet Venezuela’s food consumption demands, yet the opposition party Democratic Action disagreed saying the Venezuela imported 90% of its food requirements which could be attributed to the drop in productivity in some SOEs since nationalisation. Venezuela’s banking system comprised both public and private banks. The Public Bank of Venezuela was the most efficient and profitable with the biggest client base of 5.8 million. Sidor, Venezuela’s steel company, it was claimed, “had successfully placed its production level at around four million tons of liquid steel per year”.

The objectives for state ownership of entities were, according to the Venezuelan administration, to overcome the country’s socio-economic challenges and to change the structure of the state that was an obstruction to building socialism. SOEs in Venezuela were guided by employment creation and economic development.

The draft report made findings on the principles and values guiding SOEs as well as the Committee’s findings on the developmental projects of state-owned enterprises.

Discussion
Mr Van Dalen (DA) said that the cost of the trip should be reflected under section 1.3 “Overview of the study tour” of the draft Report. The cost of the tour was already in the public domain and so the Committee had nothing to hide.

Mr Greyling (ID) said that this report was always going to be a bit difficult because of its political nature. If the report was to give an overview of Venezuela it should give an overview of its economic performance and Venezuela’s current macroeconomic environment. Venezuela’s increasing public debt, despite increasing oil revenues, should be included in the report to provide context for the discussion on the SOEs. It was important to register the inflation and government debt, for example, as these were relevant to SOEs. The sentence “Through socialist policies, the government managed to eradicate illiteracy through the introduction of free schooling up to PhD level” did not necessarily pertain to section 2 “Political and economic overview of Venezuela” and one could contest whether or not it should be included.

Dr Koornhof (ANC) said that the Committee had been provided with documents containing key economic measurements of both Venezuela and Brazil on their arrival which should be used as the basis for the paragraph giving an economic overview of each country. It was not a contentious issue but merely required the listing of factual statistics such as growth rate, employment rate and debt levels in two brief paragraphs.

The Committee agreed on this.

The Chairperson said that not all members had responded to the request for input on the draft report being discussed.

Mr Greyling apologised for not having sent his comments through to the Committee but preferred to raise his point in the meeting for debate as he considered there would be disagreements within the Committee on points of emphasis.

Mr Sonto (ANC) said he was wary of putting forward the Committee’s findings on a country, after having spent only a few days there and without looking at from where the country had come. Judging the current government of a country without looking at previous dispensations would be a political disaster.

Mr Van Dalen said that he had observed quite a lot of poverty in Venezuela but that this was not reflected in the report. He would like for this observation to be added in.

Dr Van Dyk (DA) said that this could be added to the last paragraph under section 2 and Ms September said this could be fitted in under other headings in the report.

Mr Van Dalen said the report should include the fact that the state-owned airline Aero Postal had 1100 employees and only six operational aircraft.

Mr Sonto said that the picture given in the report should show that the historic poverty in Venezuela was being addressed by the government’s measures to nationalise entities. This had been reflected in the report where it was stated that the government had taken steps to solve its national food crisis. Mr Sonto commended Mr Mocumi for the way this was projected in the report.

Mr Greyling said that the Committee could not make a true assessment as it had been given contradictory reports on the effectiveness of the nationalisation project. For example, there were conflicting reports about whether or not the government’s agriculture programme was a success, especially in light of the opposition’s claim that Venezuela imported 90% of its food requirements due to a drop in agricultural productivity.

Mr Greyling liked the way the report, so far, had been done because it was staying away from commenting on the effectiveness on what had been done. The Committee was not in a position to judge the effectiveness of nationalisation. If it did, the report would become very political.

Dr Van Dyk said he recalled hearing contradictory views. It should be noted in the report that in the past, Venezuela was an exporter of food but that it was now an importer of food. Since the new dispensation, there had been this reversal.

Mr Greyling said that Sidor, Venezuela’s steel company, was one of the contested companies in that it had experienced a drop in productivity since it had been nationalised. Mr Greyling was therefore loathe to give the company a “glowing” report.

The Chairperson stated that the Committee needed to find common ground on what should be reflected in the report.

Mr Mokoena (ANC) suggested that it be stated that it was the presenter, who was from the ruling party, who had said that Sidor “had successfully placed its production level at around four million tons of liquid steel per year” so that there could be no allegation that the Committee was embellishing the report.

Ms September (ANC) said that it was the Committee’s task to produce a factual report.

Mr Van Dalen said that the presenter of the company had admitted to the Committee that the productivity of the industry company had decreased but that it satisfactory to them.
 
Mr Van Dalen suggested then that the heading of section 3 “State-owned enterprises” be replaced with “Reports from state-owned enterprises” to emphasise that all the information under section 3 was based on reports given by the SOEs which the Committee had to take at face value.

The Chairperson thought that this was implied as there was a later section that dealt with the report’s findings.

Mr Greyling commented on section 5 of the report saying that there did not seem to be an overarching national policy guiding the process of nationalisation in Venezuela. It should be mentioned in the report that a lot of the nationalisation projects were done by national decree and not according to a guiding policy. The same could be said for the compensation policy for nationalised companies. It was important to put these facts in the report.

Mr Greyling had found that a lot of the so-called Chief Executive Officers of the nationalised companies were members of the military and perhaps this should also be put into the report. It was a generalised fact that Venezuela was quite a militarised state. He was not quite sure what the procedures for appointing the CEOs of these companies were, but the fact remained that a number of military personnel seemed to be in charge of SOEs.

Mr Mokoena said the Committee needed to be careful here and that the Committee should not appear to be casting judgement on the background of people appointed to positions. Otherwise the Committee would be subjected to a barrage of criticism. The Committee should remain as objective as possible.

Ms September said she remembered the Committee asking Venezuela to provide it with the relevant legislation and constitutional provisions on this. These documents should be referred to with regard to this matter so that the Report remained factual.

Mr Greyling withdrew the comment about the military personnel but still said there was a lot of confusion around the appointment of SOE management which seemed to be at the discretion of the President. He could not however be sure of this.

The Chairperson said the Committee would source the relevant legislation to clarify this matter.

Mr Van Dalen disagreed with the draft report’s finding 7.1.4 that “the success of public entities is as a result of investment in human resources (labour)” and stated that the Committee could not possibly make such a finding.

Mr Mokoena suggested, as a separate point, that the heading “Findings” be replaced with “Observations”. “Findings” implied that there had been research and empirical investigation which the Committee had not done.

Ms September suggested that the sentence read “the success of public entities, according to some particular person, was as a result of investment in human resources” as this was what the Committee had been told.

Mr Greyling and Mr Van Dalen replied that this section was on the Committee’s Findings.

Ms September said the Committee had contesting views on a range of different things but it should report on what it had been told.

Mr Greyling said that the Committee chose what to put into “Findings” and the fact that someone had said something did not mean that that was what the Committee’s findings were. The statement in question was not the Committee’s finding. His own finding certainly was not the success of public entities was as a result of investment in human resources. If anything, it had been found that workers’ rights at a lot of the SOEs had not been respected.

Mr Van Dalen suggested that the first line on section 7.1.4 be deleted. The second part of section 7.1.4 could be retained.

Mr Van Dalen and Mr Greyling both disagreed with section 7.1.5 of the Findings which said “Public entities are self sufficient and sustainable and do not receive capital from government. Most entities have made profits and the proceeds are used to fund government’s developmental agenda.”

Mr Van Dalen said that this finding should read: “Public entities do not receive capital from government. Proceeds are used to fund government’s developmental agenda” was retained as the rest of the claims could not be proven. The Committee did not see any books that proved that SOEs were self-sufficient and sustainable nor did it see any proof that most of them had made profits.

Ms September suggested that members were making a big mistake by placing themselves in these issues and were “heading for headlines”. The Committee should stick to the facts as agreed and not get overly emotional about what they liked and did not like. This Committee did not have the power to change Venezuela. She was not sure what the Committee was attempting to do. It was not for the Committee to change Venezuela.

Mr Van Dalen reiterated that the facts could be put into Observations, as this was what had been told to the Committee. Making findings however was to put some kind of value-judgement on what the Committee had observed. There had to be agreement on the shared findings of the Committee. In other words, after everything that the Committee had been told, what could the Committee take from its experience for South Africa to learn from.

Ms September suggested that the Committee did not take this route as this would be a deviation from what was agreed upon about how the report should be constructed. The temperature of the meeting was soaring high and would probably go higher now that the journalist was here. Did we really think that with a report we could remove Chavez? This was not what the Committee went to Venezuela for. She did not support what was being asked by Mr Van Dalen

Mr Van Dalen said that to suggest that he wanted to remove Chavez was ludicrous. He had just said he was not comfortable with the working of the sentence and if the Committee could not agree on that then it would not agree on the report at all. Were a couple of words so important as to suggest that Mr Dalen wanted to remove Chavez and create an international incident about it?

Mr Mokoena said that it was a logical conclusion that SOEs were self-sustainable if they did not receive capital from government but were still up and running.

Mr Koornhof suggested that the finding read as: “It was reported the public entities did not receive capital from government. Most entities are self-sustainable and the proceeds are used to fund government’s developmental agenda.”
 
Mr Van Dalen said he was still not comfortable with the statement that “most entities are self-sustainable” as this could not be proved and the Committee had not investigated it.

Mr Koornhof then suggested that the word “most” be replaced with “some” so that it was stated that some entities were self-sustainable.

The Committee agreed to this.

Ms September asked if it was necessary for the Committee Secretary to read the draft report further, now that the controversial section on Venezuela was over and the journalist had gone.

Mr Van Dalen took exception to Ms September’s suggestion that the Committee was only performing for the media - which was rubbish. If he felt he had a valid point he should not be patronised. Mr Van Dalen asked for the Chairperson’s protection.

Ms September stated that, for the record, she did not say anything to Mr Van Dalen.

The Chairperson said that Ms September’s suggestion that the Committee did not have to listen to a reading of the rest of the report was reasonable.

Mr Van Dalen said that Ms September did say that now the controversial part of the report was done with that the Committee could just fly over the rest. The Committee had a job to do and, even if Ms September did not take it seriously, he did take his job seriously.

Mr Greyling said he would prefer to give his comments on the report as he had already read it and had prepared his comments. The Committee did not need to go through the rest of the report line by line.

The Committee agreed to proceed as suggested by Ms September and Mr Van Dalen.

Mr Greyling contested the “Recommendation” made under section 10.6 that “the DPE learn from the experiences in Venezuela where SOEs are guided by the values of humanism, focused on delivering affordable services to the people, bring relief to the people in need and are sustainable”. He was not sure that this was true.

Mr Greyling said that a recommendation was even stronger than a finding and there had to be agreement from the Committee on the recommendations. To say that the DPE should “learn from the experiences in Venezuela where SOEs are guided by the values of humanism, focused on delivering affordable services to the people, bring relief to the people in need and are sustainable” under Recommendations implied that the Committee believed all these things to be true and that we needed to learn from Venezuela as to how to do all these things. This could not be concluded after a one-week trip to Venezuela and was not necessarily the case. Mr Greyling said he was happy for this statement to be elsewhere in the report as something it had been told on its trip but he was not happy for the report to say that South Africa had a lot to learn from Venezuela on these issues.

Dr Koornhof said section 10.6 was one of the Committee’s observations and findings of Venezuela’s SOEs and he would be reluctant to leave 10.6 out completely. His impression of 10.6 was not that Venezuela’s model was one that South Africa should strive for and was rather that there were certain experiences in SOEs in Venezuela that were working for them on “human capital and service delivery to the people” that we could observe.

Mr Van Dalen said that he would agree with this wording that the Committee had observed that there were some things that were working in Venezuela that could be learned from.

Ms September said that this implied that there were things in Venezuela that were not working and that this was not true. There were certain practices, such as some corrupt practices that the Committee did not want to adopt. Wording to accommodate this should be found.

Mr Greyling agreed that some SOEs in Venezuela were working well and that South Africa could learn from these but there were certain other lessons learn, such as the fact that the nationalisation process was not guided by a framework policy and that this had created a lot of uncertainty. Lessons about what should not be done, as well as what should be done, should be included in the report.

Mr Greyling also contested the recommendation made under 10.8 that “the DPE consider developing mechanisms to encourage SOEs to promote and support co-operatives”. He was not sure that this was a recommendation he would support as such or if this was the way forward for SOEs in South Africa. Mr Greyling was also not sure if this was a glaring outcome of the study tour.

Ms September said that recommendation 10.8 was one that had already been made to the Department and asked what harm would be caused by leaving the sentence as it was.

Dr Koornhof said he did not have a problem with leaving 10.8 out.

Mr Greyling disagreed with the “Conclusion” of the report which said that “The Committee acknowledged that the economic systems practised in Venezuela and Brazil work for those countries”. This could be contested. If anything, Mr Greyling would argue that Brazil had had success in a number of key indicators whereas, to be as uncontroversial as possible, Venezuela had had a mixed result in terms of some key indicators.

Mr Van Dalen seconded Mr Greyling’s suggestion that the abovementioned sentence be removed.

The Chairperson said that the statement in the Conclusion was not a judgement made on whether the systems were right or wrong but was just an acknowledgement that those systems had worked for the countries.

Koornhof suggested that the term “economic system” in the Conclusion be changed to “SOEs” as the Committee’s mandate had been to study SOEs and not economic systems. It could be reflected in the Conclusion that Brazil had found a mix of privatisation and nationalisation that had worked for it. Venezuela however was clear that its vision was a socialist one, and had been since 1999.

Mr Greyling suggested that the remuneration of CEOs and executives of SOEs in Brazil should be looked at when the Committee drafts its own policies as this seemed to work quite well in Brazil. This should be included as a recommendation.

Ms September said that Brazil’s management of its water company was certainly not something that South Africa should follow. This should be reflected in the Report.

Dr Koornhof said the assessment factors introduced in Brazil’s SOEs should be captured in the Report. They had spoken of first-wave and second-wave factors. The three second-wave factors were corporate governance, competitiveness and good legislation. The Committee could learn from these.

The Chairperson thanked the Committee for the way in which it had dealt with the Report in that it had not had the fights he had expected and nor was there “blood on the carpets” as he had also expected. The Committee must agree on one thing which was that it had not gone to Venezuela or Brazil to learn about nationalisation. It was unfortunate that this issue kept on coming up. There were some journalists that said the Committee had been sent on its trip by Julius Malema. This was mischievous as it was not the reason the Committee had visited the two countries.

Dr Koornhof ascertained that the final Report was the product of the Committee as a whole and was the collective property of the Committee agreed on by all members. Considering that there were different views on the report, how would the Report be dealt with in the future?

The Chairperson answered that there was nothing that could be done about political parties making comments on the final report with the amendments that had been made.

Ms September said that now that the Report had been agreed upon by all Committee members, it was only correct for the Chairperson to put together a statement to be released to the media so that there was no confusion.

The Chairperson agreed.

The Chairperson asked for a formal adoption of the Report with amendments.

Mr Mokoena moved for the adoption of the Report.

Mr Greyling and Mr Van Dalen refrained from seconding the adoption of the Report.

Ms September stated that if no one raised their hands in disagreement then the decision was taken as unanimous.

The meeting was adjourned.